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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
University Bancorp, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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UNIVERSITY BANCORP, INC.
959 Maiden Lane
Ann Arbor, Michigan 48105
(734) 741-5858
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
June 21, 2000
To the Holders of Common Stock of University Bancorp, Inc.:
The Annual Meeting (the "Meeting") of Stockholders of University Bancorp,
Inc. (the "Company") will be held at the main office of University Bank (the
"Bank"), the Company's bank subsidiary, 959 Maiden Lane, Ann Arbor, Michigan
48105, at 12:00 noon, local time, on Wednesday, June 21, 2000 for the following
purposes:
1. To elect eight directors to serve until the next Annual Meeting of
Stockholders;
2. To transact such other business as may properly come before the
Meeting.
The Board of Directors has set 5:30 p.m. Central Standard Time, on May 2,
2000 as the record date for the determination of the stockholders entitled
to vote at the Meeting. All stockholders as of the record date are entitled to
receive this notice. The Proxy Statement and form of proxy for the Meeting are
being mailed with this notice and the initial mailing including the Proxy
Statement and form of proxy will be sent to stockholders on approximately May
10, 2000.
By order of the Board of
Directors,
Joseph L. Ranzini,
Secretary
May 1, 2000
If you wish to participate in the vote on the matters coming before the Annual
Meeting and do not intend to attend in person, please mark, sign and date the
enclosed form of proxy and return it promptly to the Company, c/o University
Bank, 959 Maiden Lane, Ann Arbor, Michigan 48105.
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UNIVERSITY BANCORP, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
June 21, 2000
TABLE OF CONTENTS
Page
General Information 4
Election of Directors 5
Security Ownership of Certain Beneficial
Owners and Management 7
Executive Officers 10
Executive Compensation 10
Section 16(a) Beneficial Ownership Reporting Compliance 11
Compensation Plans 11
Certain Relationships and Related Transactions 13
Independent Public Accountants 14
Other Matters 14
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GENERAL INFORMATION
By appointing "proxies", stockholders may vote their shares at the Annual
Meeting of Stockholders (the "Meeting") of University Bancorp, Inc. (the
"Company"), which is scheduled to be held on June 21, 2000 and any adjournments
thereof, whether or not they attend. With this Proxy Statement, the Company's
Board of Directors provides information on the items of business scheduled for
the Meeting and asks you to appoint proxies selected by the Board of Directors
to vote your shares. The Company's Board of Directors is soliciting your proxy.
The cost of such solicitation is being paid for by the Company.
The proxies will vote your shares according to your instructions. The Board
of Directors recommends a vote:
1) "FOR" the election of each of the nominees for election as directors of
the Company indicated in the accompanying form of proxy. You may vote "FOR" or
"WITHHOLD" as to all or any one or more nominees for election as directors.
You have one vote for each share of Common Stock, par value $.01 per share,
of the Company ("Common Stock") registered in your name on the Company's books
on May 2, 2000 at 5:30 p.m., Central Standard Time, the record date for the
determination of stockholders entitled to notice of and to vote at the Meeting.
At that time, the Company had 2,012,801 shares of Common Stock outstanding and
entitled to vote.
If you wish to participate in the vote on the matters coming before the
Meeting, please sign, date and promptly return your form of proxy to the
Company, c/o University Bank, 959 Maiden Lane, Ann Arbor, Michigan 48105.
If you return a properly signed and dated form of proxy but do not mark any
choices for the election of directors your shares will be voted in accordance
with the recommendations of the Board of Directors as to such election.
You may revoke the proxy solicited by the Board of Directors before its
exercise by delivering written notice of such revocation to the Company c/o
University Bank, 959 Maiden Lane, Ann Arbor, Michigan 48105, or by submitting a
subsequently dated proxy, or by attending the Meeting and voting by ballot.
Directors will be elected by plurality of the votes of Common Stock cast at
the Meeting. For these purposes, abstentions and broker non-votes are not
considered votes cast.
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Presentation of
Proposals of Stockholders
It is expected that the next annual meeting of stockholders of the Company
will be held in the 2001 calendar year. Proposals of stockholders to be
presented at such annual meeting must be received by the Company prior to
December 15, 2000 to be included in the Company's proxy statement and form of
proxy for such annual meeting. The notice and any such proposal must comply with
the applicable provisions of Rule 14a-8 under the Securities Exchange Act of
1934, as amended.
Corporate Governance - Attendance
at Board of Director and Committee Meetings
The Board of Directors oversees the management of the business of the
Company. The Board of Directors formed an audit committee during the
fiscal year ended December 31, 1999 consisting of Paul Lange Ranzini, Robert
Goldthorpe and Michael Talley, which met once during 1999. The Compensation
Committee of the Board of Directors consists of three members of the board,
presently Messrs. Stephen Lange Ranzini, Joseph L. Ranzini and Michael Talley.
The Compensation Committee met once and all members of this committee attended
each meeting. The board had no nominating committee during the fiscal year ended
December 31, 1999. The Board of Directors held a total of 5 meetings during the
1999 fiscal year. Seven directors attended each meeting, and one of the eight
directors missed just 1 of the 5 meetings as a result of a schedule conflict.
Corporate Governance - Discussion of Committees
The Audit Committee receives audit reports and management recommendations
from the Company's outside independent auditors and responds to these reports
and recommendations.
The Compensation Committee sets the amount and type of pay for the
employees of the Company. Each subsidiary has its own compensation committee and
independent compensation process. The Company has a policy that executives of
the Company do not draw pay directly from the Company because they spend their
time mainly on the business of the subsidiaries. The Company generally
reimburses the subsidiaries for time spent on Company business during regular
business hours by Company executives at the rate of pay established by the
subsidiaries. The Company's Compensation Committee does establish the level of
ESOP and Stock Option Plan compensation through recommendations to the Company's
board of directors.
Joseph L. Ranzini and Stephen Lange Ranzini as executive officers of the
Company sit on the Compensation Committees of the Company, the Bank and Michigan
BIDCO, Inc.
Compensation of Directors
Directors are not compensated for attendance at meetings, although they are
reimbursed for travel expenses.
ELECTION OF DIRECTORS
The Board of Directors recommends a vote "FOR" the slate of eight directors
named below. Biographical information is included below for each nominee.
Persons elected at the Meeting will hold office until a successor is elected or
until earlier resignation or removal. In the event that any of
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these director nominees becomes unavailable to serve, proxies will be voted for
the election of such other person(s) as may be recommended by the Board of
Directors.
Nominees for Election as Directors of the Company
Stephen Lange Ranzini, age 35, has been President, CEO and a director of
the Company or its Predecessors since July 1988, and served as the Treasurer of
the Company and its Predecessors from July 1988 to December 1995. Since May
1993, Mr. Ranzini has also served as the Treasurer and a Director of Michigan
BIDCO, Inc. (the "BIDCO"), a community development lending organization
described further below. Since December 1995, Mr. Ranzini has been Treasurer and
a Director of Northern Michigan Foundation, a non-profit community development
lending organization, which shares common senior management with BIDCO. Since
March 1994 Mr. Ranzini has served as a director of University Bank and since
November 1997 has served as Chairman of the Bank's board of directors. He has
held various senior management positions with the bank, including that of
President of the Bank between October 1994 and November 1995 and again since
November 1997. Between December 1995 and October 1997 he served as the Bank's
Senior Vice President - Mortgage Banking, supervising the Bank's subsidiaries:
Arbor Street LLC, Midwest Loan Services, Inc., Varsity Funding, LLC, and Varsity
Mortgage, LLC. A graduate of Yale in 1986, he is the son of Joseph L. and
Mildred Ranzini and the brother of Joseph Lange Ranzini and Paul Lange Ranzini.
Since July 1991, Mr. Ranzini has been a director of CityFed Financial
Corp., a former savings and loan holding company now based in Massachusetts.
Since May 1997 he has been a director of Municipal Bankers Corporation, a
Toronto Stock Exchange listed financial services company based in Toronto,
Canada.
Joseph L. Ranzini, Esq., age 71, has been Chairman of the Board, a director
and Secretary of the Company or of predecessor corporations merged into the
Company (the "Predecessors") since July 1988. Mr. Ranzini has been a Director of
University Bank (the Company's subsidiary) since July 1988 and served as
Chairman of the Board from March 1994 to January 1996 and Secretary since
November 1997. Since May 1993, Mr. Ranzini has served as the President and
Chairman of the Board of Michigan BIDCO, Inc. Since December 1995, Mr. Ranzini
has been President and Chairman of the Board of Northern Michigan Foundation.
Mr. Ranzini maintained a private law practice in New Jersey from 1965 until June
1991.
Keith Brenner, age 55, has served as a director of the Company or its
Predecessors from October 1985, and also as the President and Treasurer of the
Company or its Predecessors (the Company was then known as Fortune 44 Company,
and manufactured and sold fortune cookies) from inception until December 31,
1989. Prior to forming the Company, Mr. Brenner was employed by Celestial
Seasonings, Inc., a tea manufacturer located in Boulder, Colorado, from 1980 to
1985 as Vice President of Marketing and Vice President of Corporate Development.
Since the fourth quarter of 1988, Mr. Brenner has been President and owner of
Brenner & Associates, a strategic planning and marketing consulting firm,
located in Boulder, Colorado.
Robert Goldthorpe, age 63, has served as a director of the Company since
April 1996. Mr. Goldthorpe also served as a Director of University Bank from
September 1992 to January 1996. For more than the past five years, Mr.
Goldthorpe has been President of Goldthorpe Enterprises, a diversified holding
company with operations in the central and eastern portion of the Upper
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Peninsula of Michigan, with investments in hotels, restaurants, apartment
buildings, a hardware store, and the construction and contracting business.
Dr. Joseph Lange Ranzini, age 40, has served as a director of the Company
since April 1996. A graduate of Dartmouth College in 1982, he earned his M.D.
from the University of Virginia in 1986, and completed his residency with a
specialty in General Surgery at Mary Imogene Bassett Hospital, an affiliate of
Columbia University in Cooperstown, New York, in 1992. Since that time he has
been in a general surgery private practise at Augusta Medical Center in
Fishersville, Virginia. He is the son of Joseph L. and Mildred Ranzini and the
brother of Stephen Lange Ranzini and Paul Lange Ranzini.
Mildred Lange Ranzini, age 68, has been a director of the Company or its
Predecessors since July 1988, and has served as Assistant Secretary since
January 1990. Mrs. Ranzini holds a M. Div. from Princeton Theological Seminary,
a Masters Degree in Education from Columbia University and a B.A. from Wellesley
College. Mrs. Ranzini has not otherwise held an active business position during
the prior five years.
Prof. Paul Lange Ranzini, age 38, has served as a director of the Company
since April 1996. He is Managing Editor at A-R Editions, a leading musicology
book publisher, and a Doctoral Candidate in Music History and Theory at the
University of Chicago. He has attended the University of Chicago since 1989,
except in 1994 and 1995, when he earned a Fulbright Fellowship to Germany for
Dissertation Research. At the University of Chicago, he was also employed
part-time as the computer data center manager at the University's International
House. From 1984 to 1988 he was a graduate student at the University of Michigan
in Ann Arbor, Michigan, where he earned two Masters, an M.A. in Musicology and
an M.M. in Organ and Church Music. From 1979 to 1983 he was a student at the
College of William and Mary, where he received a B.A. in Philosophy. He is the
son of Joseph L. and Mildred Ranzini and the brother of Stephen Lange Ranzini
and Joseph Lange Ranzini.
Michael Talley, age 49, has served as a director of the Company or its
Predecessors since 1988. Since March 1990, Mr. Talley has served as an Account
Executive at Ladenburg, Thalmann & Co. Inc. in New York, New York. Between
February 1988 and March 1990 Mr. Talley served as an Account Executive at
Oppenheimer & Co., Inc. in New York, New York. For more than five years until
February 1988, he served as an Account Executive at L.F. Rothschild Unterberg
Towbin in New York, New York. Mr. Talley is a native of Detroit, Michigan, and a
graduate of Michigan State University, in East Lansing, Michigan.
There is no family relationship between any current director or executive
officer of the Company and any other current director or executive officer of
the Company, except as indicated above.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is information with respect to number and percentage of
outstanding shares of the Company beneficially owned by certain persons,
including those known to the Company to own beneficially more than 5% of the
Company's outstanding Common Stock, the directors of the Company individually
and the directors and officers of the Company as a group. The information in the
table is as of March 31, 2000, except as otherwise indicated.
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Amount and Nature Percent
Name and Address Title of of Beneficial of
Class Ownership (1) Class
Joseph L. Ranzini, Esq. Common 144,223 (4) 7.17%
c/o University Bank Stock
959 Maiden Lane
Ann Arbor, MI 48105
Mildred Ranzini Common 45,000 (5) 2.24%
c/o University Bank Stock
959 Maiden Lane
Ann Arbor, MI 48105
Stephen Lange Ranzini Common 723,640 (3)(6) 35.95%
c/o University Bank Stock (10)
959 Maiden Lane
Ann Arbor, MI 48105
Dr. Joseph Lange Ranzini Common 1,049,793 (2)(3) 52.16%
675 Cherry Avenue Stock (10)
Waynesboro, VA 22980
Prof. Paul Lange Ranzini Common 1,132,623 (2)(3) 56.27%
1024 Pleasant View Road Stock (10)
Middleton, WI 53562
Keith E. Brenner Common 29,582 (7)(9) 1.46%
135 Green Meadow Lane Stock
Boulder, CO 80302
Robert Goldthorpe Common 42,810 (9) 2.11%
2564 Helmer St. Stock
McMillan, MI 49853
Michael Talley Common 15,000 (9) 0.74%
55 Payson Ave. #4I Stock
New York, NY 10034
Ranzini Family Trust Common 480,000 (2) 23.85%
dated 11/8/90 Stock
c/o University Bank
959 Maiden Lane
Ann Arbor, MI 48105
Ranzini Family Trust Common 272,958 (3) 13.56%
dated 12/20/89 Stock
c/o University Bank
959 Maiden Lane
Ann Arbor, MI 48105
Ranzini Family Trusts Common 379,665 (10) 18.86%
c/o University Bank Stock
959 Maiden Lane
Ann Arbor, MI 48105
[table continued on following page]
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All Current Officers Common 1,465,254 (2)(3)(7) 71.20%
and Directors, as a Stock (8)(9)(10)
Group (Eight Persons)
(1) Unless otherwise indicated, the indicated person is believed to
have sole voting and investment power over shares indicated as beneficially
owned by such person.
(2) Includes 480,000 shares of Common Stock held by an irrevocable
trust, the primary beneficiary of which is Mr. Stephen Lange Ranzini. The
trustees of the trust are Dr. Joseph Lange Ranzini and Prof. Paul Lange Ranzini.
(3) Includes 272,958 shares of Common Stock held by an irrevocable
trust, the primary beneficiaries of which are Mr. Joseph L. Ranzini's five adult
children. The trustees of the trust are Mr. Stephen Lange Ranzini, Dr. Joseph
Lange Ranzini and Prof. Paul Lange Ranzini. Mr. Stephen Lange Ranzini is a
primary beneficiary of one-fifth or 54,592 of the shares of Common Stock held
under the terms of the trust.
(4) Does not include the 480,000 shares of Common Stock referred to in
note 2 above, the 272,958 shares of Common Stock referred to in note 3 above, or
the 379,665 shares of Common Stock referred to in note 11 below, as to which Mr.
Ranzini disclaims beneficial ownership.
(5) Mrs. Ranzini disclaims beneficial ownership of shares of Common
Stock owned by her spouse, Joseph L. Ranzini.
(6) Includes 22,132 shares of Common Stock which represent Mr. Stephen
Lange Ranzini's current accrued allocation of shares of Common Stock under the
University Bancorp, Inc. ESOP. Does not include the shares held in the trust
referred to above in note 2 as to which Mr. Ranzini is the primary beneficiary.
(7) Includes shares of Common Stock owned beneficially by Mr. Brenner's
retirement plan, and also includes 1,062 shares of Common Stock owned by Mr.
Brenner's minor children and 1,830 shares owned by Copy Time Communications,
Ltd., a company owned 50% by Mr. Brenner, for which, Mr. Brenner advises, he has
sole voting and investment power.
(8) Does not include shares held by the University Bancorp, Inc. ESOP,
other than the accrued allocation of shares thereunder to Stephen Lange Ranzini
referred to in note 6 above.
(9) Currently exercisable options on 15,000 shares of common stock are
held by each of Mr. Brenner, Mr. Goldthorpe and Mr. Talley. The shares subject
to such person's respective option are included in such person's respective
holdings and in the total shares held by all current officers and directors as a
group.
(10) Includes shares held by the thirteen Ranzini Family Trusts of
1996, which collectively hold 379,665 shares of Common Stock. Stephen Lange
Ranzini and Prof. Paul Lange Ranzini as trustees disclaim beneficial ownership
of 379,665 shares of Common Stock each held by Trusts for which they are
trustees, and which are included in the shares above. Dr. Joseph Lange Ranzini
as trustee disclaims beneficial ownership of 204,435 shares of Common Stock held
by Trusts for which he is trustee.
[footnotes continued on following page]
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(11) The total number of shares of Common Stock held by the Ranzini
Group (Mr. Joseph L. Ranzini, Mr. Stephen Lange Ranzini, Mrs. Mildred Ranzini,
the various Ranzini Family Trusts) and the shares included in note 6, above, is
1,377,863.
EXECUTIVE OFFICERS
Joseph L. Ranzini and Stephen Lange Ranzini hold executive officer
positions with the Company, as indicated above under "Election of Directors".
Officers of the Company serve at the discretion of the Board of Directors
and generally are to be elected annually.
EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash compensation
paid or accrued for services rendered in all capacities to the Company and
affiliates for the fiscal years ended December 31, 1999, 1998, and 1997, of the
Chief Executive Officer of the Company. There were no other individuals whose
salary and bonus from the Company or its affiliates for the latest fiscal year
exceeded $100,000:
Summary Compensation Table
Long Term
Annual Compensation($) Compensation
Awards
Other Securities
Name and Annual Restricted
Principal Compen- Stock Options/ Underlying
Position Year Salary Bonus sation Awards($) SARs (#)
Stephen Lange 1999(1) $105,365 $ - $ 6,750 $ - -
Ranzini (2)(3)(4)
President &
CEO 1998(1) $110,281 $ - $10,715 $ - -
(2)(3)(4)
1997(1) $110,080 $ - $13,634 $ - -
(2)(5)
- -------------------
(1) Salary in 1999, 1998 and 1997 includes $45,400, $45,500 and $45,600,
respectively, from Michigan BIDCO, Inc., for which Mr. Ranzini served as
Treasurer.
(2) Includes SEP IRA pension payment of $6,750 from Michigan BIDCO, Inc. in
1999, 1998 and 1997.
(3) At the end of the Company's fiscal year ended December 31, 1999, 22,132
shares of the Company's common stock were allocated to Mr. Ranzini under
the Company's ESOP. Mr. Ranzini's rights in all of all these shares are
vested. Valued at $3.00 per share, the last sale price of the Company's
common stock on December 31, 1998, the aggregate value of such shares was
$66,396. Mr. Ranzini is entitled to an allocation for 1999, however, the
allocation has not yet been finalized.
(4) Allocation under the Company's ESOP of 1,220 shares of the Company's common
stock to Mr. Ranzini in June 1998.
(5) Allocation under the Company's ESOP of 2,118 shares of the Company's common
stock to Mr. Ranzini in August 1997.
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No options to purchase shares of Common Stock were granted to the
executive officer named in the above summary compensation table during 1999.
Mr. Ranzini did not receive during the three fiscal years ended
December 31, 1999 nor did he hold at December 31, 1999, any stock options, SAR
grants or Long Term Incentive Plan Awards.
The Company does not have a defined benefit or actuarial pension
plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The management of the Company ("we") reviewed the Forms 3 and 4 and
amendments thereto furnished to the Company pursuant to Rule 16a-3(e)
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), during its most recent fiscal year. We also reviewed the Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year, and written representations from executive officers and directors
of the Company that did not file a Form 5 with respect to its most recent fiscal
year, to the effect that no filing of a Form 5 is required with respect to such
person. Based upon our review, no person who, at any time during the Company's
most recent fiscal year, was a director, officer or beneficial owner of more
than 10% of the Company's Common Stock, failed, as disclosed in the above Forms,
to file on a timely basis, any reports required by Section 16(a) of the Exchange
Act.
COMPENSATION PLANS
University Bancorp, Inc. 1995 Stock Plan. The 1995 Stock Plan of the
Company was adopted by the Board of Directors in November 1995 (and amended in
April 1996) and later approved by the Company's stockholders. The purpose of the
1995 Stock Plan is to provide incentives to officers, directors, employees and
consultants of the Company. Under the 1995 Stock Plan, officers and other
employees of the Company and any present or future parent or subsidiary
(collectively "Related Corporations") are provided with the opportunity to
purchase shares of Common Stock as "incentive stock options" ("ISOs"), as
defined in Section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Code"), and directors, officers, employees and consultants of the Corporation
and Related Corporations are provided with the opportunity to purchase shares of
Common Stock of the Company pursuant to options which do not qualify as ISOs
("Non-Qualified Options") and, in addition, such directors, officers, employees
and consultants may be granted awards of stock in the Company ("Awards") and
opportunities to make direct purchases of stock in the Company ("Purchases").
Both ISOs and Non-Qualified Options are referred to hereafter individually as an
"Option" and collectively as "Options". Options, Awards and Purchases are
referred to hereafter as "Stock Rights".
A total of 525,000 shares of Common Stock (as adjusted automatically per
the terms of the Plan as a result of the Company's February 1998 3 for 2 stock
split effected in the form of a 50% stock dividend of Common Stock) are reserved
for issuance upon the exercise of Options or in connection with Awards or
Purchases of stock under the 1995 Stock Plan (subject to adjustment for capital
changes). Shares subject to Options which for any reason expire or are
terminated unexercised may again be available for grant under the 1995 Stock
Plan. Unless sooner terminated, the 1995 Stock Plan will terminate on November
15, 2005.
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The 1995 Stock Plan is administered by the Board of Directors of the
Company. The Board has the right, in accordance with the Plan, to appoint a
Compensation Committee ("Compensation Committee") of three or more of its
members to administer the Plan. The Compensation Committee of the Board of
Directors has been established and provides recommendations to the Board on the
granting of options. The 1995 Stock Plan requires that each Option shall expire
on the date specified by the Compensation Committee, but not more than ten years
from its date of grant in the case of ISOs and not more than ten years and one
day in the case of Non-Qualified Options. However, in the case of any ISO
granted to an employee or officer owning more than 10% of the total combined
voting power of all classes of stock of the Company or any Related Corporation,
the ISO expires no more than five years from its date of grant.
Exercise of any Stock Right, in whole or in part, under the 1995 Stock Plan
is effected by a written notice of exercise delivered to the Company at its
principal office together with payment for the Common Stock in full, or, at the
discretion of the Compensation Committee, by the delivery of shares of Common
Stock of the Company, valued at fair market value, a promissory note, or through
an exercise notice payment procedure, or any combination thereof.
During 1999, options for a total of 30,315 shares of Common Stock were
granted under the 1995 Stock Plan. No options on shares of Common Stock were
exercised in 1999. As of March 31, 2000, options for a total of 153,565 shares
of Common Stock were outstanding under the 1995 Stock Plan and 326,870 shares of
Common Stock were available for grant of Stock Rights under the 1995 Stock Plan.
Director Stock Options. In 1993, the Board of Directors approved the grant
of options to purchase 15,000 shares of common stock to each of the four
non-executive directors, in lieu of compensation. The exercise price was set at
$2.08 per share. which was the then current bid price per share as reported by
NASDAQ. The options are immediately exercisable and expire July 19, 2003. No
options were exercised in 1999, and options on 15,000 shares were exercised in
the first quarter of 2000. Options granted on 30,000 shares remain outstanding
under this plan at March 31, 2000.
University Bancorp, Inc. Employee Stock Ownership Plan. The Company has had
in effect an employee stock ownership plan (the "ESOP") for eligible employees
of the Company and its subsidiaries. The ESOP is a qualified plan under section
401(a) of the Internal Revenue Code, as amended. The ESOP provides that the
employer may contribute thereto such amounts as it may determine and the
contributions may be in cash or in stock, at the election of the Company.
Contributions are allocated among employees who have reached age 21, have at
least one year of service and are employed more than 500 hours throughout the
year. Contributions are allocated in the proportion that the employee's total
compensation for the year (up to $200,000) bears to the total compensation of
all ESOP participants for the year (up to $200,000 per participant). However,
the sum of contributions and forfeitures allocated to an employee in any year
cannot exceed the lesser of $30,000 or 25 percent of his or her compensation for
the year, subject to indexing in accordance with Internal Revenue Service
regulations to reflect changes in the cost of living. Employees who retire, die,
become disabled or terminate their employment for any other reason would receive
the value of the vested portion of their accounts, in cash or stock. Employees
vest in their accounts in accordance with a vesting schedule based on years of
credited service. Employees have the right to require the Company to repurchase
shares distributed to them pursuant to the terms of the ESOP. In 1999 and 1998,
the Company contributed to the ESOP 23,662 and 16,445 additional shares of
Common Stock valued at $50,282 and
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$53,445, respectively, based upon the then current bid price of the Company's
common stock of $2.125, and $3.25.
University Bank 401(k) Profit Sharing Plan. The Bank established a new
401(k) Profit Sharing Plan (the "401(k) Plan"), effective January 1, 1996, which
allows an employee of the Company or any of its subsidiaries who has reached age
18 and has completed one year of service to elect to reduce their compensation
by up to 12% (subject to specified maximum limitations) and have such amounts
contributed on their behalf to the 401(k) Plan. The 401(k) Plan provides for
matching employer contributions for each employee who elects to reduce his or
her compensation. The amount of matching contribution is up to the sole
discretion of the employer. The employer can also make additional discretionary
contributions for participating employees. The sum of an employee's salary
reductions, and the matching and discretionary contributions and forfeitures
allocated to an employee in the year could not exceed the lesser of $30,000 or
25 percent of his or her compensation for the year, subject to indexing in
accordance with Internal Revenue Service regulations to reflect changes in the
cost of living. Participants in the 401(k) Plan who retire, die or terminate
their employment for any other reason after having completed at least five years
of service would receive the total amount of their account; others receive their
own salary reduction contributions plus only a portion of any employer matching
contributions based on a vesting schedule. No matching contributions were made
by the Bank for the years ended December 31, 1999 and 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In May 1993, a Rural Business and Industrial Development Company now called
Michigan BIDCO, Inc. was established (the "BIDCO"). The BIDCO is licensed by the
Michigan Financial Institutions Bureau (the "FIB") under the State of Michigan
BIDCO program, and regulated and examined by the Bank & Trust Division of the
FIB. The BIDCO invests in businesses in Michigan with the objective of fostering
job growth and economic development.
In 1995 and 1996, the Company purchased a total of $197,000 principal
amount of 9% convertible debentures of BIDCO for $203,000, convertible into 131
shares of BIDCO's shares, representing 4.97% of BIDCO's shares on a fully
diluted basis. In order to fund the Company's working capital needs, during 1998
a total of $34,000 convertible debentures of BIDCO were sold to various
affiliates of Joseph L. Ranzini and Stephen Lange Ranzini at the then current
adjusted book value of BIDCO, for a total of $42,337.
Joseph L. Ranzini is the President and Chairman of the Board of BIDCO and
Stephen Lange Ranzini is the Treasurer. Stephen Lange Ranzini received $52,150
in salary, SEP IRA and board fee compensation from BIDCO in 1998. Joseph L.
Ranzini received $98,338 in salary, SEP IRA and board fee compensation from
BIDCO in 1999, and $1,400 in board fees from University Bank in 1999.
When the BIDCO invests in businesses, it generally requires as part of its
lending and/or investing agreement the right to designate one seat on the board
of the companies in which it invests. Staff members of the BIDCO are assigned
the task of sitting on such boards or administering such investments.
Remuneration for such assignments is paid directly to the BIDCO. In connection
with his duties as Treasurer of BIDCO, Stephen Lange Ranzini, is the President
of Arbor Street Corp. (New Jersey), the General Partner for Austin Trading
Partners, LP, an investor in a mixed office waste deinked pulp mill.
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The BIDCO has, by general policy of its board of directors, a loan and
investment in one borrower limit of $500,000. From time to time, the BIDCO
receives loan and/or investment proposals from third parties requesting an
investment by the BIDCO in excess of this $500,000 limit. In such event, the
BIDCO has in certain instances formed single purpose limited liability companies
(the "LLCs") whose members, including Joseph and Stephen Ranzini, are directors,
shareholders and bondholders of the BIDCO to fund amounts over the $500,000
limit. The outside investor groups invest on a pro rata, parri passu (equal)
basis with the BIDCO. During 1999, the following investments were still active
which had been made with investor group participation:
The BIDCO invested $42,000 and an LLC (in which Joseph and Stephen Ranzini
each contributed 1/10th of the LLCs' investment) invested $28,000 for a 40%
equity investment in Northern Federal Hotels LLC, which in turn purchased 50% of
Okemos Holdings LLC, which built a Fairfield Inn by Marriott in Okemos,
Michigan.
In 1995, the Bank, through a subsidiary, purchased $1,000,000 in federal
low income housing tax credits through a partnership investment in Michigan
Capital Fund for Housing Limited Partnership I, a Michigan limited partnership
(the "Partnership"). The investment consisted of a $100,000 equity purchase and
the execution by the subsidiary of a $900,000 promissory note held by the
Partnership (the "Note"). In connection with the execution of the Note, the
Partnership required Joseph L. Ranzini and the Ranzini Family Trust dated
12/20/89 to personally guarantee the Note, because the Bank was prohibited from
doing so by state banking regulations.
The Company maintains an investment securities account with Ladenburg
Thalmann & Co. Inc. Michael Talley, a director of the Company, receives
commissions on the transactions in this account. The Company pays commissions at
rates which are comparable to those paid in its other investment securities
accounts at other brokerage firms.
Stephen Lange Ranzini, Prof. Paul Lange Ranzini and Dr. Joseph Lange
Ranzini are the sons of Joseph L. Ranzini and Mildred Ranzini.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountant selected to be the Company's principal
accountants for the fiscal year ending December 31, 2000 is Crowe, Chizek & Co.
A representative of such accounting firm is expected to be available by speaker
telephone at the Meeting. Such representative will have an opportunity to make a
statement, if he or she desires to do so, or to respond to appropriate
questions.
OTHER MATTERS
The cost of proxy solicitation will be borne by the Company. Banks, brokers
and other nominees will be reimbursed for their customary expenses incurred in
connection with the forwarding of proxy materials. In addition, proxies may be
solicited, without additional compensation, by directors, officers and other
regular employees of the Company and its subsidiaries by telephone, telegraph,
telecopy or in person.
Dated: May 1, 2000
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UNIVERSITY BANCORP, INC.
This proxy is solicited on behalf of the Board of Directors for the Annual
Meeting of Stockholders of University Bancorp, Inc. (the "Company") scheduled
for June 21, 2000.
The undersigned hereby appoints Joseph L. Ranzini, Stephen Lange Ranzini
and Paul Lange Ranzini, and each of them individually, proxies, with full power
of substitution, to vote all shares of Common Stock of the undersigned at the
Annual Meeting of Stockholders (the "Meeting") scheduled to be held on June 21,
2000, and at any adjournment(s) thereof, upon all subjects that may properly
come before the Meeting and any adjournments thereof, including the matters
described in the proxy statement furnished herewith, subject to any directions
indicated on the reverse side of this proxy. If no directions are given, the
proxies will vote "FOR" the election of all listed nominees for election as
Directors and at their direction on any other matter that may properly come
before the Meeting or any adjournment thereof.
Your vote for the election of directors, described in the proxy statement
may be indicated on the reverse side of this proxy.
The nominees for election as directors are: Keith Brenner, Robert
Goldthorpe, Joseph L. Ranzini, Dr. Joseph Lange Ranzini, Mildred Ranzini, Prof.
Paul Lange Ranzini, Stephen Lange Ranzini and Michael Talley.
- -----------------------------------------------------------------
The Board of Directors recommends a vote FOR all listed
candidates for election as Directors.
- -----------------------------------------------------------------
(SEE REVERSE SIDE)
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This proxy, when properly executed, will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR the election as
Directors of the nominees listed on the reverse side of this proxy.
ELECTION OF DIRECTORS (see reverse side for list of nominees)
FOR WITHHELD FOR, except vote withheld from the following
nominee(s):
[ ] [ ]
__________________________________
__________________________________
The signer hereby revokes all proxies
heretofore given by the signer to vote at the
Meeting or any adjournment thereof.
Dated:__________________
x_______________________
Signature
Stockholder: ________________________
Signature (if held jointly)
Please sign above exactly as name appears
hereon. Joint owners should each sign. When
signing as officer, attorney, executor,
administrator, trustee or guardian, please
give full title as such.